Tekelec completes acquisition of Steleus; modifies terms to pay $55M in cash, instead of $29M in cash and $27M in stock

October 15, 2004

2 Min Read

CALABASAS, Calif. -- Tekelec (NASDAQ:TKLC) today announced it has completed the acquisition of Steleus Group Inc., a real-time performance management company that supplies network-related intelligence to telecom operators.

In order to expedite the closing, the companies have agreed to modify the merger consideration from the terms originally announced August 20, 2004. Under the revised terms, Tekelec has purchased 100 percent of Steleus' outstanding stock for approximately $55 million, all cash. The original consideration consisted of approximately $29 million in cash and $27 million of Tekelec stock. All other terms of the transaction remain consistent with those originally announced.

"Our customers' response to the Steleus acquisition has been quite positive," said Fred Lax, Tekelec's president and CEO. "The acquisition expands Tekelec's portfolio of value-added applications with real-time monitoring and management capabilities for legacy and next-generation networks, helping operators around the globe lower risk, reduce time to market for new services and realize significant cost savings."

Steleus will form the cornerstone of Tekelec's new Communications Software Solutions business unit, which also will include existing Tekelec applications and will be led by Rick Mace, current president, CEO and chairman of the board of Steleus.

"Leveraging our past collaboration with Steleus, we already have made significant progress with plans to integrate Steleus' GPRS [general packet radio services] and VoIP [voice over Internet protocol] solutions into our portfolio of next-generation switching, signaling and value-added solutions offerings," Lax added. "This solutions portfolio will help our global customers evolve their networks to IP at their own pace, implementing exactly what they need, when they need it."

Employment Inducement Stock Options and Restricted Stock Units

In connection with the acquisition, 119 Steleus officers and employees were granted options to purchase a total of 881,550 shares of Tekelec common stock, of which options to purchase 200,000 shares were granted to Rick Mace, president and CEO of Steleus. In addition, seven Steleus officers and key employees were granted Restricted Stock Units (RSUs) representing the right to receive a total of 98,510 shares of Tekelec common stock, of which RSUs covering 34,478 shares of Tekelec common stock were granted to Mr. Mace.

The number of shares subject to such options and RSUs amounts to less than 2 percent of the outstanding shares of Tekelec common stock. The option and RSU grants were made under Tekelec's 2004 Equity Incentive Plan for New Employees and met the "employee inducement" exception to the Nasdaq rules requiring shareholder approval of equity-based incentive plans.

Tekelec Inc.


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